You are opening a summer business, a chain of three drive-through snow-cone stands. You have hired other college students to work and have purchased a cash register with locked-in tapes. You retain one key, and the other is available to the lead person on each shift. Required: 1. Write a list of the procedures for all employees to follow when ringing up sales and giving change. 2. Write a list of the procedures for the lead person to follow in closing out at the end of the day. Be specific so that employees will have few if any questions. 3. What is your main concern in the design of internal control for the snow-cone stands? How did you address that concern? Be specific.
> The following list, in alphabetical order, shows the various items that regularly appear on the financial statements of Sterns Audio Book Rental Corp. The amounts shown for balance sheet items are balances as of December 31, 2017 (with the exception of r
> Pete is the president of Island Enterprises. Island Enterprises began business at the beginning of the current year. The company’s controller is out of the country on business. Pete needs a copy of the company’s balanc
> Listum & Sellum Inc. is a medium-sized midwestern real estate company. It was founded five years ago by its two principal stockholders, Willie Listum and Dewey Sellum. Willie is president of the company, and Dewey is vice president of sales. Listum &
> The following items are available from the records of Victor Corporation at the end of the current year: Required: Prepare a balance sheet. Hint: Not all of the items listed should appear on a balance sheet. For each non-balance-sheet item, indicate wh
> You have inherited $1 million! Required: Describe the process you will go through in determining how to invest your inheritance. Consider at least two options and choose one. You may consider the stock of a certain company, bonds, real estate investment
> The Financial Accounting Standards Board requires companies to supplement their consolidated financial statements with disclosures about segments of their businesses. To comply with this standard, the notes to the financial statements included in Marriot
> Brunswick Corporation reported the following amounts in various statements included in its Form 10-K for the year ended December 31, 2015. (All amounts are stated in millions of dollars.) Net earnings for 2015 $ 241.4 Cash dividends paid in 2015 …………………
> The following balance sheet items, listed in alphabetical order, are available from the records of Ruth Corporation at December 31, 2017: Required: 1. Prepare in good form a classified balance sheet as of December 31, 2017. 2. Compute Ruthâ€
> The following costs are incurred by a retailer: 1. Display fixtures in a retail store 2. Advertising 3. Merchandise for sale 4. Incorporation (i.e., legal costs, stock issue costs) 5. Cost of a franchise 6. Office supplies 7. Wages and salaries 8. Comput
> Joseph Knapp, a newly hired accountant wanting to impress his boss, stayed late one night to analyze the office supplies expense. He determined the cost by month for the previous 12 months of each of the following: computer paper, copy paper, fax paper,
> Comparative income statements for Grammar Inc. are as follows: Required: The president and management believe that the company performed better in 2017 than it did in 2016. Write the president’s letter to be included in the 2017 annua
> Colorado Corporation was organized at the beginning of the year, with the investment of $250,000 in cash by its stockholders. The company immediately purchased an office building for $300,000, paying $210,000 in cash and signing a three-year promissory n
> Refer to the list of income statement items in Problem 2-6. Assume that Shaw Corporation classifies all operating expenses into two categories: (1) selling and (2) general and administrative. Problem 2-6: The following income statement items, arranged
> As assistant controller for a small consulting firm, you are responsible for recording and posting the daily cash receipts and disbursements to the ledger accounts. After you have posted the entries, your boss, the controller, prepares a trial balance an
> The following income statement items, arranged in alphabetical order, are taken from the records of Shaw Corporation for the current year: Required: 1. Prepare a single-step income statement for the current year. 2. What weaknesses do you see in this f
> The balance sheet of Stevenson Inc. includes the following items: Required: 1. Determine the current ratio and working capital. 2. Beyond the information provided in your answers to (1), what does the composition of the current assets tell you about St
> The following items, in alphabetical order, are available from the records of Walker Corporation as of December 31, 2017 and 2016: Required: 1. Calculate the following as of December 31, 2017, and December 31, 2016: a. Working capital b. Current ratio
> Franklin Co., a specialty retailer, has a history of paying quarterly dividends of $0.50 per share. Management is trying to determine whether the company will have adequate cash on December 31, 2018, to pay a dividend if one is declared by the board of d
> The following income statements were provided by Gleeson Company, a retailer: Required: 1. Identify each income statement as either single- or multiple-step format. 2. Convert the 2016 income statement to the same format as the 2017 income statement.
> As chief lending officer for a bank, you need to decide whether to make a loan to The Coca-Cola Company. The current items, listed in alphabetical order, are taken from the consolidated balance sheets of The Coca-Cola Company and its competitor PepsiCo a
> The following costs are incurred by a retailer: 1. Point-of-sale systems in a retail store 2. An ad in the yellow pages 3. An inventory-control computer software system 4. Shipping merchandise for resale to chain outlets Required: For each cost, explain
> Jane Erving, a newly hired accountant wanting to impress her boss, stayed late one night to analyze the long-distance calls by area code and time of day placed. She determined the monthly cost for the previous 12 months by hour and area code called. Req
> Comparative income statements for Thesaurus Inc. are as follows: Required: The president and management believe that the company performed better in 2017 than it did in 2016. Write the president’s letter to be included in the 2017 ann
> Wisconsin Corporation was organized at the beginning of the year with the investment of $400,000 in cash by its stockholders. The company immediately purchased a manufacturing facility for $300,000, paying $150,000 in cash and signing a five-year promiss
> You are controller for an architectural firm whose accounting year ends on December 31. As part of the management team, you receive a year-end bonus directly related to the firm’s earnings for the year. One of your duties is to review the transactions re
> Refer to the list of income statement items in Problem 2-6A. Assume that Corbin Enterprises classifies all operating expenses into two categories: (1) selling and (2) general and administrative. Problem 2-6A: The following income statement items, arran
> The following income statement items, arranged in alphabetical order, are taken from the records of Corbin Enterprises for the current year: Required: 1. Prepare a single-step income statement for the current year. 2. What weaknesses do you see in this
> The balance sheet of Kapinski Inc. includes the following items: Required: 1. Determine the current ratio and working capital. 2. Kapinski appears to have a positive current ratio and a large net working capital. Why would it have trouble paying bills
> The following items, in alphabetical order, are available from the records of Quinn Corporation as of December 31, 2017 and 2016: Required: 1. Calculate the following as of December 31, 2017, and December 31, 2016: a. Working capital b. Current ratio 2
> The following balance sheet items, listed in alphabetical order, are available from the records of Singer Company at December 31, 2017: Required: 1. Prepare a classified balance sheet as of December 31, 2017. 2. Compute Singer’s curre
> Roosevelt Inc., a consulting service, has a history of paying annual dividends of $1 per share. Management is trying to determine whether the company will have adequate cash on December 31, 2018, to pay a dividend if one is declared by the board of direc
> The following income statements were provided by Chisholm Company, a wholesale food distributor: Required: 1. Identify each income statement as either single- or multiple-step format. 2. Restate each item in the income statements as a percentage of sal
> As chief lending officer for a bank, you need to decide whether to make a loan to Starwood Hotels & Resorts Worldwide, Inc. The current items, listed in alphabetical order, are taken from the consolidated balance sheets of Starwood Hotels & Resor
> Taggart Corp. records adjustments each month before preparing monthly financial statements. The following selected account balances on May 31, 2017 and June 30, 2017, reflect month-end adjustments: Required: 1. The company purchased a 36-month insuranc
> Bob Reynolds operates a real estate business. A list of accounts on April 30, 2017, before any adjustments are recorded, appears as follows: Cash …………………………………………………………………………………………… $15,700 Prepaid Insurance ……………………………………………………………………………… 450 Office Sup
> Susan Spiffy, owner of Spiffy Cleaners, a drive-through dry cleaners, would like to expand her business from its current location to a chain of cleaners. Revenues at the one location have been increasing an average of 8% each quarter. Profits have been i
> The following financial statements are available for Elm Corporation for its first month of operations: Required: Using the format illustrated in Exhibit 3-1, prepare a table to summarize the transactions entered into by Elm Corporation during its fir
> Expert Consulting Services Inc. was organized on March 1 by two former college roommates. The corporation provides computer consulting services to small businesses. The following transactions occurred during the first month of operations: Required: 1.
> Just Rolling Along Inc. was organized on May 1 by two college students who recognized an opportunity to make money while spending their days at a beach along Lake Michigan. The two entrepreneurs plan to rent bicycles and in-line skates to weekend visitor
> The following events take place at Dillon’s Delivery Service: 1. Supplies are ordered from vendors who will deliver the supplies within the week. 2. Vendors deliver supplies on account, payment due in 30 days. 3. Customers’ deliveries are made, and the c
> Stegner Inc. reported net income of $130,000 for the year ended December 31, 2017. The following items were included on Stegner’s balance sheets at December 31, 2017 and 2016: Stegner uses the indirect method to prepare its statement
> Atlas Superstores occasionally finds itself with excess cash to invest and consequently entered into the following transactions during 2017: Required: Identify and analyze all transactions on the books of Atlas Superstores during 2017, including any ne
> Swartz Inc. enters into the following transactions during 2017: Required: Identify and analyze all transactions on Swartz’s records to account for its investments during 2017. July 1: Paid $10,000 to acquire on the open market $10
> Gas stations sometimes sell gasoline at a lower price to customers who pay cash than to customers who use a credit card. A local gas station owner pays 2% of the sales price to the credit card company when customers pay with a credit card. The owner pays
> You are considering making a loan to The Coca-Cola Company. The following information is from the financial statements included in Form 10-K for fiscal years 2014 and 2013 (in millions of dollars): Net operating revenues for the year ended: December 31,
> Sparkle Jewels distributes fine stones. It sells on credit to retail jewelry stores and extends terms that require the stores to pay in 60 days. For accounts that are not overdue, Sparkle has found that there is a 95% probability of collection. For accou
> Financial statements are the means by which accountants communicate to external users. Recent financial reporting scandals have focused attention on the accounting profession and its role in the preparation of these statements and the audits performed on
> At the beginning of 2017, EZ Tech Company’s Accounts Receivable balance was $140,000, and the balance in Allowance for Doubtful Accounts was $2,350. EZ Tech’s sales in 2017 were $1,050,000, 80% of which were on credit. Collections on account during the y
> Motel $49.99 has purchased a large warehouse to store all supplies used by housekeeping departments in the company’s expanding chain of motels. In the past, each motel bought supplies from local distributors and paid for the supplies from cash receipts.
> The following information is available to assist you in preparing a bank reconciliation for Calico Corners on May 31: a. The balance on the May 31 bank statement is $8,432.11. b. Not included on the bank statement is a $1,250 deposit made by Calico Corn
> Copeland Antiques reported a net loss of $33,200 for the year ended December 31, 2017. The following items were included on Copeland’s balance sheets at December 31, 2017 and 2016: Copeland uses the indirect method to prepare its stat
> You are considering an investment in the common stock of Apple Inc. The following information is from the financial statements included in Form 10-K for fiscal years 2015 and 2014 (in millions of dollars): Cost of sales for the year ended: September 26,
> The following highly condensed income statements and balance sheets are available for Budget Stores for a two-year period. (All amounts are stated in thousands of dollars.) Before releasing the 2017 annual report, Budget’s controller
> Users of financial statements rely on the information available to them to decide whether to invest in a company or lend it money. As an investor, you are comparing three companies in the same industry. The cost to purchase inventory is rising in the ind
> You are considering an investment in the common stock of Wal-Mart. The following information is from the consolidated statements of income of Wal-Mart Stores, Inc. and Subsidiaries for the years ended January 31, 2016 and 2015 and the consolidated statem
> Businesses incur various costs in selling goods and services. Each business must decide which costs are expenses of the period and which should be included in the cost of the inventory. The following table lists various types of businesses along with cer
> Lakeside Slammers Inc. is a minor league baseball organization that has just completed its first season. You and three other investors organized the corporation; each put up $10,000 in cash for shares of capital stock. Because you live out of state, you
> The following account balances are taken from the records of Chauncey Company at December 31, 2017. The Prepaid Insurance account represents the cost of a three-year policy purchased on August 1, 2017. The Rent Collected in Advance account represents the
> Palmer Industries prepares annual financial statements and adjusts its accounts only at the end of the year. The following information is available for the year ended December 31, 2017: a. Palmer purchased computer equipment two years ago for $15,000. T
> Kretz Corporation prepares monthly financial statements and therefore adjusts its accounts at the end of every month. The following information is available for March 2017: a. Kretz Corporation takes out a 90-day, 8%, $15,000 note on March 1, 2017, with
> Four Star Video has been in the video rental business for five years. The following is a list of accounts for Four Star Video at May 31, 2017. It reflects the recurring transactions for the month of May but does not reflect any month-end adjustments. Ca
> Atkins Advertising Agency began business on January 2. The transactions entered into by Atkins during its first month of operations are as follows: a. Acquired its articles of incorporation from the state and issued 100,000 shares of capital stock in ex
> Refer to the table for Beverly Entertainment Enterprises in part (1) of Problem 3-9. Problem 3-9: Four brothers organized Beverly Entertainment Enterprises on October 1. The following transactions occurred during the first month of operations: Requir
> Four brothers organized Beverly Entertainment Enterprises on October 1. The following transactions occurred during the first month of operations: Required: 1. Prepare a table to summarize the preceding transactions as they affect the accounting equatio
> Two years ago, Darlene Darby opened a delivery service. Darby reports the following accounts on her income statement: Sales ………………………………………………………………..………. $69,000 Advertising Expense ………………………………………………………. 3,500 Salaries Expense ……………………………………………………………
> Neveranerror Inc. was organized on June 2 by a group of accountants to provide accounting and tax services to small businesses. The following transactions occurred during the first month of business: Required: 1. Prepare a table to summarize the preced
> Blue Jay Delivery Service is incorporated on January 2 and enters into the following transactions during its first month of operations: Required: 1. Prepare a table to summarize the preceding transactions as they affect the accounting equation. Ignore
> Roberto is the plant superintendent of a small manufacturing company that is owned by a large corporation. The corporation has a policy that any expenditure over $1,000 must be approved by the chief financial officer in the corporate headquarters. The ap
> Many events are linked to a source document. The following is a list of events that occurred in an entity: a. Paid a one-year insurance policy. b. Paid employee payroll. c. Provided services to a customer on account. d. Identified supplies in the storero
> The following current assets are listed in a company’s general ledger. The accountant wants to place the items in order of liquidity on the balance sheet. Accounts Receivable Certificates of Deposit (six months) Investment in Stock Prepaid Rent Money Ma
> Lenox Corp. sold merchandise for $5,000 to M. Baxter on May 15, 2017, with payment due in 30 days. Subsequent to this, Baxter experienced cash-flow problems and was unable to pay its debt. On August 10, 2017, Lenox stopped trying to collect the outstandi
> At Morris Mart Inc., all sales are on account. Mary Morris-Manning is responsible for mailing invoices to customers, recording the amount billed, opening mail, and recording the payment. Mary is very devoted to the family business and never takes off mor
> A list of accounts for Maple Inc. at December 31, 2017, follows: Required: 1. Determine cost of goods sold for 2017. 2. Determine net income for 2017. 3. Prepare a balance sheet dated December 31, 2017. Accounts Receivable $ 2,359 Land $20,000 Adve
> The consolidated balance sheets of Gap Inc. included merchandise inventory in the amount of $1,873,000,000 as of January 30, 2016 (the end of fiscal year 2015) and $1,889,000,000 as of January 31, 2015 (the end of fiscal year 2014). Net sales were $15,79
> Two Wheeler, a bike shop, opened for business on April 1. It uses a periodic inventory system. The following transactions occurred during the first month of business: Required: 1. Identify and analyze each of the preceding transactions of Two Wheeler.
> The 2015 Form 10-K of Gannett Co., Inc. (publisher of USA Today and many other newspapers) includes the following in the note that summarizes its accounting policies: Inventories Inventories, consisting principally of newsprint, printing ink and plate ma
> Following is an inventory acquisition schedule for Weaver Corp. for 2017: During the year, Weaver sold 12,500 units at $12 each. All expenses except cost of goods sold and taxes amounted to $20,000. The tax rate is 30%. Required: 1. Compute cost of go
> Oxendine Company’s inventory records for the month of November reveal the following: Inventory, November 1 ……………………………………………….. 200 units @ $18.00 November 4, purchase ………………………………………………… 250 units @ $18.50 November 7, sale ……………………………………………………….. 300 u
> You have just forwarded to your boss the monthly bank reconciliation you prepared for the company. One of the reconciling items is a customer’s NSF check in the amount of $10,000. As part of your responsibility as controller, you have drafted an adjustme
> Refer to the financial statements for Chipotle reproduced in the chapter and answer the following questions. Chipotle reproduced: 1. What was the company’s net income for 2015? 2. State Chipotle’s financial position
> Repeat Problem 5-10 using the perpetual system. Problem 5-10: Bitten Company’s inventory records show 600 units on hand on October 1 with a unit cost of $5 each. The following transactions occurred during the month of October: All e
> Bitten Company’s inventory records show 600 units on hand on October 1 with a unit cost of $5 each. The following transactions occurred during the month of October: All expenses other than cost of goods sold amount to $3,000 for the m
> Moonlight Bay Inn is incorporated on January 2, 2017, by its three owners, each of whom contributes $20,000 in cash in exchange for shares of stock in the business. In addition to the sale of stock, the following transactions are entered into during the
> Refer to the transactions for Neveranerror Inc. in Problem 3-7. Problem 3-7: Neveranerror Inc. was organized on June 2 by a group of accountants to provide accounting and tax services to small businesses. The following transactions occurred during the
> Refer to the transactions for Blue Jay Delivery Service in Problem 3-6. Problem 3-6: Blue Jay Delivery Service is incorporated on January 2 and enters into the following transactions during its first month of operations: Required: 1. Prepare journal
> Malcolm Inc. was incorporated on January 1 with the issuance of capital stock in return for $90,000 of cash contributed by the owners. The only other transaction entered into prior to beginning operations was the issuance of a $75,300 note payable in exc
> Refer to the transactions for Atkins Advertising Agency in Problem 3-11. Problem 3-11: Atkins Advertising Agency began business on January 2. The transactions entered into by Atkins during its first month of operations are as follows: a. Acquired its
> Lori Matlock operates a graphic arts business. A list of accounts on June 30, 2017, before recording any adjustments, appears as follows: Cash ……………………………………………………………………………………….... $ 7,000 Prepaid Rent …………………………………………………………………………….... 18,000 Supplies …
> The following financial statements are available for Oak Corporation for its first month of operations: Required: Describe as many transactions as you can that were entered into by Oak Corporation during the first month of business. Oak Coporation
> Dynamic Services Inc. was organized on March 1 by two former college roommates. The corporation will provide computer tax services to small businesses. The following transactions occurred during the first month of operations: Required: 1. Prepare a ta
> The following information is available from the financial statements included in Form 10-K for fiscal years 2014 and 2013 for Under Armour, Inc. and Columbia Sportswear Company (in thousands of dollars): Required: 1. Calculate the accounts receivable t
> Beach way Enterprises was organized on June 1 by two college students who recognized an opportunity to make money while spending their days at a beach in Florida. The two entrepreneurs plan to rent beach umbrellas. The following transactions occurred dur
> The following events take place at Anaconda Accountants Inc.: 1. Supplies are ordered from vendors, who will deliver the supplies within the week. 2. Vendors deliver supplies on account, payment due in 30 days. 3. New computer system is ordered. 4. Old c
> St. Charles Antique Market reported a net loss of $6,000 for the year ended December 31, 2017. The following items were included on St. Charles Antique Market’s balance sheets at December 31, 2017 and 2016: St. Charles Antique Market
> Trendy Supercenter occasionally finds itself with excess cash to invest and consequently entered into the following transactions during 2017: Required: Identify and analyze all transactions on the books of Trendy Supercenter during 2017, including any
> Vermont Corp. enters into the following transactions during 2017: Required: Identify and analyze all transactions on Vermont’s records to account for its investments during 2017. July 1: Paid $10,000 to acquire on the open market
> A local fast-food store is considering accepting major credit cards in its outlets. Current annual sales are $800,000 per outlet. The company can purchase the equipment needed to handle credit cards and have an additional phone line installed in each out
> You are considering making a loan to The Hershey Company. The following information is from the financial statements included in Form 10-K for fiscal years 2014 and 2013 (in thousands of dollars): Net sales for the year ended: December 31, 2014 ……………………
> Rough Stuff is a distributor of large rocks. It sells on credit to commercial landscaping companies and extends terms that require customers to pay in 60 days. For accounts that are not overdue, Rough Stuff has found that there is a 90% probability of co
> At the beginning of 2017, Miyazaki Company’s Accounts Receivable balance was $105,000, and the balance in Allowance for Doubtful Accounts was $1,950. Miyazaki’s sales in 2017 were $787,500, 80% of which were on credit. Collections on account during the y
